GMXR Plans 5 More Haynesville/Bossier Wells

GMXR posted an update on its operations, rigs and agreements.

Operational Update

The Company expects to drill and complete five additional H/B horizontal wells for a total of seven completions in 2Q 2010. All the wells drilled and completed will be constructed using 5 1/2" casing, will have an average lateral length of 4,500 feet and are scheduled for 10 to 12 frac stages. The Company expects Q1 production to meet previously announced guidance of 3.2 Bcfe to 3.3 Bcfe and reconfirms Q2 2010 production guidance of 4.2 Bcfe to 4.4 Bcfe which will be a sequential growth of approximately 34%. Completed Well Costs ("CWC") are expected to decline from Q1 2010 to Q2 2010 by approximately 10% to $8.2 million. The cost reductions reflect increased drilling efficiencies, redesigned completion plans and continued focus on cost management.

2010 production guidance is 17.5 Bcfe which will result in operating cash flow of approximately $62 million including income from hedges. The Company expects to spend $175 million in CAPEX and with current cash on hand, expects to draw approximately $78 million on its $130 million borrowing base over the 12 months of 2010. Based on our current drilling plans and proved developed producing ("PDP") reserve increases, the Company expects to increase its borrowing base in excess of our liquidity needs over the next three years.

Rig Sublease

The Company has agreed to sublease its fourth Helmerich and Payne FlexRig 3(TM) to another major operator for a period of 180 days. This sublease agreement entitles the Company to receive a day rate which will be applied to its previously contracted day rate and the sublease period will be deducted from the three year contract. The primary term of the sublease began on March 25, 2010.

Joint Operating Agreement

The Company has executed a Joint Operating Agreement ("JOA") with EXCO Operating Company, LP to jointly develop H/B leasehold rights in the Scottsville area of Harrison County, Texas. Under the JOA, the Company is contributing its H/B leasehold rights in the Verhalen Prospect and EXCO is contributing its H/B leasehold rights in the Hamilton Unit, creating a 3,850 acre block of contiguous leasehold with a potential of 49 H/B Horizontal locations on 80 acre spacing. The JOA adds an additional 9 H/B Hz drilling locations. The Company will operate the joint leasehold with an 84.3% working interest and EXCO will participate with a 15.7% working interest representing the pro rata shares of each company's leasehold contribution under the JOA. The reduction in the Company's capital expenditures, production, and operating cash flow and the increase in liquidity related to the JOA already has been included in the published production guidance of 17.5 Bcfe, capital expenditures of $175 million, and operating cash flow of $62 million.

GMXR began developing the Verhalen Prospect in 2009 and has previously drilled and completed 7 H/B Hz wells in this prospect that are not part of the JOA. The Company spud the first well under the JOA, the Verhalen F #1H on March 29, 2010 with an AFE of $8 million.

Michael J. Rohleder, President of GMXR, said, "We are in the best liquidity position in our history and with the transition to drilling with 5 1/2" casing, we continue to improve well results and our focus on cost and prudent financial management. The results of our Mia Austin #1H, which has averaged over 6.7 Mmcfe/d for the first 60 days and has an internally generated estimated EUR of 5.7 Bcfe, demonstrates our ability to deliver results consistent with our expectations of 5.5 Bcfe to 6.5 Bcfe EUR's. Q2 will be a significant catalyst for growth as we complete a record number of H/B Hz wells utilizing our larger diameter casing design and stimulation plans directed by our new drilling and completions team. Our estimated production for 2010 is 77% protected with floors at $6.43; 2011 is 62% protected at $6.14 and 2012 is 58% protected at $6.08. This positions us to continue our three rig drilling program and generate positive operating cash flow even in sub $4.00 gas markets. We will also add significant collateral to our borrowing base which will allow us to expand our liquidity."